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Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain $260/year for 5 years Risk-adjusted discount rate is

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Larkspur, Inc. is using a discounted cash flow model. Scenario 1: Cash flows are fairly certain $260/year for 5 years Risk-adjusted discount rate is 5% Risk-free discount rate is 4% Scenario 2: Cash flows are uncertain 75% probability that cash flows will be $260 in 5 years 25% probability that cash flows will be $115 in 5 years Risk-adjusted discount rate is 5% Risk-free discount rate is 4% Identify which model Larkspur might use to estimate the discounted fair value under each scenario, and calculate the fair value. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to 2 decimal places, e.g. 5,275.25.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

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